Chinese pair bid for mining rights

China Railway Construction and Tongling Nonferrous Metals offered US$651 million ($920 million) for Canada's Corriente Resources to gain copper resources in South America.

Corriente shareholders will receive C$8.60 ($11.60) per share in cash, China Railway Construction said yesterday.

China's biggest railroad builder and Tongling, the nation's second-largest copper producer, would gain mining rights to 17 deposits in southeast Ecuador. China has been scouring the globe for raw materials to sustain the world's fastest-growing major economy.

"It's a trend for Chinese companies to acquire metal resources abroad to meet domestic demand," Li Jingyuan, an analyst at Haitong Futures, said from Shanghai yesterday.

Corriente shares closed at C$7.55 on the Toronto stock exchange on December 24.

Corriente's main assets include mining rights in the Corriente Copper Belt in Ecuador, covering 17 deposits in the four main mining regions of Mirador, Mirador Norte, Panantza and San Carlos, China Railway said. Copper reserves in the four deposits are about 11.54 million tonnes.

China's currency regulator, which oversees the country's US$2.27 trillion of foreign-exchange reserves, said on December 8 it will "actively support" companies investing overseas.

Overseas investment by Chinese companies surged 190 per cent to US$20.5 billion in the third quarter from a year earlier, according to the Ministry of Commerce.

China Railway and Tongling's venture, CRCC-Tongguan Investment, will finance its offer for Corriente through bank loans and internal resources.

The acquisition is subject to acceptance by shareholders representing a minimum of two-thirds of Corriente shares and Government approval in China and Canada.

- BLOOMBERG